Household Income Events

INTRODUCTION

Household Income Events are appropriate to model a change in Household Income isolated from Industry production and payroll. In Household Income Events, you can specify the specific income group(s) receiving the income. Examples would be a government stimulus check or tax refund for individuals. 

Event Type

Household Income Events
Event Use Analyzing a change in Household Income separately from production 
Event Specification HH LT15K, HH 15-30K, HH 30-40K, HH 40-50K, HH 50-70K, HH 70-100K, HH 100-150K, HH 150-200K ,HH GT200K
Event Value Total Household Income for specified income group

 

EVENT TYPE DETAILS

Household Income represents the income received by people for their participation in production, from government and business transfer payments, and from returns on capital (e.g., interest payments, dividends). Household Income Events allow the analyst to pick which income group(s) will receive the gain or loss of income.

Household Income Event values should include all new Household Income the residents will receive. IMPLAN will automatically deduct personal tax and savings from the Event Value. The remaining portion is applied to that Household Income group's spending on goods and services. However, not all of the goods/services demanded are produced or even available locally. Household spending of income on imported goods and services will be treated as leakage and those purchases will not be counted in the impact results. In most instances, the impact results will be lower than the user input for event value.

The household spending pattern by income group can be viewed in a Region’s Social Accounting Matrix (SAM) or in the 

Specification Explanation
Households LT15k Those earning less than $15,000
Households 15-30K Those earning between $15,000 and $30,000
Households 30-40K Those earning between $30,000 and $40,000
Households 40-50K Those earning between $40,000 and $50,000
Households 50-70K Those earning between $50,000 and $70,000
Households 70-100K Those earning between $70,000 and $100,000
Households 100-150K Those earning between $100,000 and $150,000
Households 150-200K Those earning between $150,000 and $200,000
Households GT200K Those earning greater than $200,000

 

HOUSEHOLD INCOME EVENT

In this example, there will be a stimulus check for households that earn less than $40,000. We are told this will result in $2,000,000 of new income in the U.S. for households earning less than $15K, $1,500,000 for households earning between $15-30K, and $3,000,000 for households earning between $30-40K. Therefore, we will set up one Household Income Event for each household level. A total of $6.5M is being analyzed.

To set up these activities using Household Income Events, first create a unique Title for each Event, then select Household Income for the Event Type. 

For the first Event, click on Specification. Use the dropdown menu to select 10001 - Households LT15k. The only Value for this Event Type is Household Income, so enter $2,000,000. For the second Event, click on Specification. Use the dropdown menu to select 10002 - Households 15-30k and enter $1,500,000. For the third Event, click on Specification. Use the dropdown menu to select 10003 - Households 30-40k and enter $3,000,000.

ANALYZING A HOUSEHOLD INCOME EVENT

Now it is time to assign Events to Groups. To assign an Event, click the Drag Event icon, hold it, and drop it into the corresponding Group. The Multi-Select feature allows users to select more than one Event at a time.

 

Each Group will indicate the number of assigned Events in the upper right corner by showing a number indicating the number of Events in that Group. To double check if an Event was correctly added to a Group, use the drop down arrow to view the assigned Events.

Now click Run in the bottom right of the Impacts Screen.

When the analysis is finished, click View Results. For more information on how to interpret them, check out the article Examining Results & Interpreting Direct, Indirect, and Induced Effects.

The first thing you will notice is that there are no Direct or Indirect Effects. Household Income Events only affect household spending, so there will only be Induced Effects. Learn more in the article Explaining Event Types.

In this example, we included three events, so the default on the Results screen will include all three. If you want to look at the impacts for just one event, click on Filters and search for the Event Name that you want to see.

NOTE

The example above analyzed stimulus payments to Households in the U.S. earning less than $40k annually. This resulted in additional economic benefits to the Region higher than the initial input values totaling $6.5M. This is not always the case when running Household Income Events, as sometimes the impact results are lower than the event value entered. As this analysis was run at the national level opposed to a state, county, or zip code, the leakages due to imports were reasonably low. Additionally, this example analyzed spending by lower income groups, who tend to save less and spend more of their earnings.

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Written August 30, 2023